Standardization of material resource consumption at the enterprise

Task 1: Determine the Material Consumption Rate for One Product

Given:

• Net weight of the product: 40 kg
• Annual output: 5,000 products
• Current material utilization rate: 0.7
• Planned material utilization rate: 0.8
• Annual output increase: 18%
• Price of the material: 25,000 per ton

Determine:
a) The current and planned material consumption rate and the amount of waste per product.
b) The annual savings from the planned reduction of material in physical and value terms.
c) How improving the technological process will affect the level of waste.

Comment: The problem does not account for irrecoverable losses and by-products, which are common in industrial processes.
These factors should be considered in real-life scenarios.

Solution:

a) Current and Planned Material Consumption Rate and Amount of Waste per Product

1. Current Material Consumption Rate: 40 / 0,7 = 57,14 kg.

2. Planned Material Consumption Rate: 40 / 0,8 = 50 kg

3. Amount of Waste per Product:

   • Current conditions: 57,14 - 40 = 17,14 kg
   • Planned conditions: 50 - 40 = 10 kg

b) Annual Savings from the Planned Reduction of Material

1. Annual Savings in Physical Terms: ( 17,14 - 10 ) * 5000 * 1,18 = 42 126 kg = 42,126 t

2. Annual Savings in Value Terms: 42,126 * 25 000 = 1 053 150

c) Effect of Improving the Technological Process on the Level of Waste

Improving the technological process, which increases the material utilization rate, reduces the level of waste.
This is evident from the reduction in waste per product from 17.14 kg to 10 kg. Consequently, the enterprise
will achieve significant material savings both in physical and value terms.

Problem 2. Determine the planned material consumption rate

Given:

• Net weight of the product: 40 kg
• Annual output: 2,000 pcs
• Current material utilization rate: 0.75
• Planned material utilization rate: 0.80
• Price per 1 ton of material: 8,500 

Determine:

1. The actual and planned material consumption rates.
2. The annual savings from increasing the material utilization rate in physical and monetary terms.

Solution:

Step 1: Understanding Material Utilization Rate

The material utilization rate is the ratio of the net weight of the product to the material consumption rate.
It indicates how efficiently the material is used in production.

Step 2: Calculating the Actual Material Consumption Rate

The formula for the material consumption rate  is: Net Product Weight  / Material Utilization Rate

Substitute the given values to find the actual material consumption rate: 40 / 0,75 = 53,3 kg

Step 3: Calculating the Planned Material Consumption Rate

Using the same formula, substitute the planned material utilization rate: 40 / 0,8 = 50 kg

Step 4: Calculating Annual Resource Savings in Physical Terms

To find the annual resource savings in physical terms, subtract the planned material consumption rate from the actual rate
and multiply by the annual output:
Annual Savings = ( ConsuptionRate_actual - ConsuptionRate_plan  ) * Annual Output
Annual Savings = ( 53.33 kg  - 50 kg ) * 2000 = 3.33 kg * 2000 = 6660 kg = 6.66 tons

Step 5: Calculating Annual Savings in Value Terms

To find the annual savings in value terms, multiply the amount of saved material by its price per ton:
Annual Savings_value = Annual Savings_physical * Price per Ton

Annual Savings_value = 6.66 tons * 8500 = 56,610 

Explanation:

1. Material Utilization Rate: This rate helps determine how much material is needed to produce one unit of the product.
   A higher utilization rate means less material is wasted.
2. Actual and Planned Material Consumption Rates: These rates show the amount of material required per product
   under current and improved conditions.
3. Annual Resource Savings: By improving the material utilization rate, the company reduces the amount of material
   needed per product, leading to significant savings in both physical and monetary terms.

Problem 3: Determine the Material Utilization Rate

Given:

• Net weight of the product: 250 kg
• Amount of actual waste during processing: 60 kg
• Waste reduction due to improved technology: 12%

Determine:

1. The material utilization factor before and after the technological improvement.
2. The proportion of waste before and after the technological improvement.

Solution:

Step 1: Calculate the Amount of Waste After Technological Improvement

The waste will be reduced by 12%, so the new amount of waste is:
New Waste = Original Waste * ( 1 - Reduction Percentage )
New Waste = 60 kg * (1 - 0.12) = 60 kg * 0.88 = 52.8 kg

Step 2: Calculate the Material Consumption Rate ( MC_R ) Before and After Improvement

• Before Improvement: 
  MC_{R Before}  = Net Product Weight + Original Waste
   MC_{R Before}  = 250 kg + 60 kg = 310 kg

• After Improvement:
  MC_{R After}  = Net Product Weight + New Waste
  MC_{R After}  = 250 kg + 52.8 kg = 302.8 kg

Step 3: Calculate the Material Utilization Factor

The material utilization factor is the ratio of the net product weight to the material consumption rate.

• Before Improvement:
  Material Utilization Factor_before =  Net Product Weight / MC_{R Before} 
  Material Utilization Factor_before = 250 kg / 310 kg = 0.806 

• After Improvement:
  Material Utilization Factor_After =  Net Product Weight / MC_{R After} 
  Material Utilization Factor_After = 250 kg / 302.8 kg = 0.825 

Step 4: Calculate the Proportion of Waste

The proportion of waste is the ratio of the waste to the total material consumption rate.

• Before Improvement:
  Waste Proportion_before = Original Waste / MC_{R Before} 
  Waste Proportion_before  = 60 kg / 310 kg = 0.193

• After Improvement:
  Waste Proportion_After = New Waste / MC_{R After} 
  Waste Proportion_After = 52.8  kg / 302.8 kg = 0.174

Conclusion:

As a result of improving the manufacturing technology for parts:

• The material utilization factor increased from 0.806 to 0.825.
• The waste proportion decreased from 0.193 to 0.174.

Explanation:

1. Material Utilization Factor: This factor indicates how efficiently the material is used in production.
   A higher factor means less material is wasted.
2. Waste Proportion: This shows the percentage of material that becomes waste during production.
   A lower proportion indicates better efficiency and less waste.

By improving the technological process, the company has increased its material utilization efficiency and
reduced waste, leading to cost savings and more sustainable production practices.

Problem 4. Determine the rate of material consumption per product

Determine the rate of material consumption per product if the average weight of the product is 2.1 kg,
the material utilization factor is 0.9.

Solution.

To find the production rate, we need to compose equations based on the formula for finding the material utilization factor.

Material utilization factor = m / Cr

m is the mass of the product

Cr is the consumption rate

Let's compose an equation.

0.9 = 2.1 / Cr

Cr = 2.3 kg.

Answer: the production rate is 2.3 kg.

Problem 5: Determine the Excess Material Consumption in Physical and Monetary Terms

Given:

• Incorrect material delivered to the workshop.
• Consumption rate per unit of product with incorrect material: 4.012 kg.
• Established standard consumption rate: 3.871 kg.
• Number of products made: 10,000.
• Price per 1 ton of measured material: 8,120.
• Price per 1 ton of non-measured material: 8,000.

Determine:

1. The excess consumption of material in physical terms.
2. The excess consumption of material in monetary terms.

Solution:

Step 1: Calculate the Material Consumption in Physical Terms

1. Consumption with Non-Measured Material:
   Consumption_non-measured =  Consumption Rate_non-measured * Number of Products
   Consumption_non-measured  = 4.012 kg * 10,000 = 40,120 kg

2. Consumption with Measured Material:
   Consumption_measured =  Consumption Rate_measured * Number of Products 
   Consumption_measured = 3.871 kg * 10,000 = 38,710 kg

Step 2: Calculate the Material Consumption in Monetary Terms

1. Monetary Consumption with Measured Material:
   Monetary Consumption_measured = Consumption_measured  * Price per Ton_measured
   Monetary Consumption_measured = 38.710 tons * 8,120  = 314,325.2 

2. Monetary Consumption with Non-Measured Material:
   Monetary Consumption_non-measured = Consumption_non-measured  * Price per Ton_non-measured 
   Monetary Consumption_non-measured = 40.120 tons * 8,000 = 320,960

Step 3: Calculate the Excess Material Consumption

1. Excess Consumption in Physical Terms:
   Excess Consumption_physical = Consumption_non-measured - Consumption_measured
   Excess Consumption_physical = 40,120 kg - 38,710 kg = 1,410 kg

2. Excess Consumption in Monetary Terms:
   Excess Consumption_monetary = Monetary Consumption_non-measured - Monetary Consumption_measured
   Excess Consumption_monetary = 320,960 - 314,325.2  = 6,634.8 

Conclusion:

Due to the fault of the supply department, the excess material consumption is:

• In physical terms: 1,410 kg.
• In monetary terms: 6,634.8 

Explanation:

1. Material Consumption in Physical Terms: This step calculates the total amount of material used
   for producing 10,000 products with both the incorrect and correct materials.
2. Material Consumption in Monetary Terms: This step converts the physical consumption into monetary
   terms based on the price per ton of each type of material.
3. Excess Material Consumption: This step determines the additional material used and the extra cost
   incurred due to using the incorrect material.

By following these steps, we can clearly see the impact of the incorrect material delivery on both the physical and monetary consumption of materials.